Tax Hikes Unnecessary, Local Lawmaker Says

By City News Service:

A Riverside County lawmaker said a positive economic forecast released this week by the California Legislative Analyst’s Office for the current fiscal year proves there’s no justification for tax increases, while another legislator dismissed the forecast as irrelevant to those struggling to survive financially.

“The LAO’s forecast is good news for California,” said Assemblywoman Melissa Melendez, R-Lake Elsinore. “It clearly shows there is no need to tax the healthcare of millions, or raise car taxes, as the governor and legislative Democrats have proposed. It also means there is money to address high priority program needs.”

According to the LAO’s summary “Fiscal Outlook,” the state budget is “better prepared for an economic downturn than it has been at any point in decades.”

Analysts said that, barring any unforeseen events, the state is on track to end the 2016-17 fiscal year with $11.5 billion in reserves. The LAO cautioned that the projected figure assumes “no new budget commitments through next year” that would drain away funds.

“If the economy continues to grow through 2019-20, annual operating surpluses and larger reserves could materialize, and there may be capacity for some new budget commitments -- whether spending increases or tax reductions,” according to the outlook.

Analysts noted that if the economy begins to stall or there’s a stampede on Wall Street that precipitates an equities crash, all bets are off.

“In years of budgetary surplus, it is of utmost importance that we exercise fiscal restraint and not squander it by going on a spending spree,” Melendez said. “Rather, we must capitalize on this surplus and prepare for future recessions by continuing to grow our Rainy Day Fund and paying down our debt obligations.”

Assemblyman Eduardo Garcia, D-Indio, characterized the LAO analysis as overlooking the “many Californians (who) are not thriving and continue to experience significant levels of unemployment, steeply rising housing and higher education costs, stagnant wages and incomes.”

“Unfortunately, the benefits of an economic recovery have not reached all areas of the state, and only a select segment of the population is sharing in the resulting prosperity,” Garcia said.

Meantime, Assembly Speaker Toni Atkins, D-Long Beach, said the economic forecast “reflects the continuing strength of the California economy ... thanks to smart choices and tough decisions by the Legislature.”

“As the Assembly looks ahead to crafting next year’s budget, we will continue to build the Rainy Day Fund, set aside funds for state costs associated with increasing the minimum wage to $15 per hour, and provide meaningful new investments in developmental disability services, education infrastructure and other critical needs,” Atkins said.

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